This article first appeared on GuruFocus.
PetroChina (PCCYF) is positioning for a strategic shift with a proposed 40 billion yuan ($5.6 billion) acquisition of three natural gas storage companies from its parent, China National Petroleum Corp., according to a filing on the Hong Kong stock exchange. The deal involves Xinjiang Gas Storage, Xiangguosi Gas Storage, and Liaohe Gas Storage, priced at roughly 17 billion yuan, 10 billion yuan, and 13 billion yuan, respectively. If completed, the transaction could add around 11 billion cubic meters of storage capacity, potentially strengthening PetroChina’s foothold in supporting China’s energy infrastructure and long-term natural gas strategy.
This comes as China accelerates its transition away from coal, with the International Energy Agency projecting natural gas demand could rise more than 40% by 2050 under current policies. Management has emphasized that the acquisition is designed to enhance operational flexibility, improve allocation efficiency, and unlock greater synergies across the natural gas value chain. For investors, this signals PetroChina’s intent to lean deeper into natural gas as a structural growth driver, aligning itself with broader policy goals on energy security and emission reduction.
The timing, however, is notable. PetroChina’s net income for the first half of the year was 84 billion yuan ($12 billion), down from 89 billion yuan during the same period in 2024, reflecting pressure from softer crude prices and stagnating domestic oil demand. Expanding storage capacity could provide PetroChina with additional leverage to balance short-term profitability pressures while positioning for long-term growth. For investors tracking China’s energy transition, this potential acquisition could be a pivotal step in redefining PetroChina’s earnings mix and strategic trajectory over the coming years.